Florida 2-20 General Lines Agent (Property, Casualty, Commercial Lines and Florida Law)Florida Law and EthicsMedium
A Florida 2-20 General Lines Agent is reviewing a client's commercial property policy. The client owns a small manufacturing business and is concerned about potential damage to their building and contents due to an earthquake. The current policy is a standard commercial property form. What advice should the agent provide regarding earthquake coverage?
- AEarthquake coverage is usually added by endorsement or a separate policy.
- BEarthquake is typically included as a covered peril under the basic commercial property form.
- CEarthquake damage is only covered if the business is located in a designated high-risk seismic zone.
- DEarthquake is covered under the policy's windstorm and hail provisions.
Show answer & explanationAnswer & explanation
Correct answer: A. Earthquake coverage is usually added by endorsement or a separate policy.
Standard commercial property policies, including basic and broad forms, typically exclude earthquake as a covered peril. It must generally be added by a specific endorsement or purchased as a separate policy.
Why the other options are wrong
- B. Standard commercial property forms generally exclude earthquake.
- C. While risk zones influence pricing and availability, earthquake coverage is not automatically included based on location; it's an excluded peril.
- D. Windstorm and hail are distinct perils from earthquake and are covered differently.
Earthquake Coverage (Commercial Property)
Earthquake is an excluded peril in most standard commercial property insurance forms and must be added via endorsement or a separate policy.
- Not a standard covered peril.
- Requires specific endorsement.
- Can also be purchased as a standalone policy.
Memory trick: Perils Excluded Need Endorsement